Why children need life insurance
Why would anyone buy life insurance for their children or grandchildren? For some people, it’s upsetting to even think about.
However, there are several scenarios where, in addition to the basic need for life insurance, it can make a big difference in a child’s future.
Helps build a nest egg
Consider the impact on your child’s start into adulthood if they could use the cash value of a permanent life insurance policy as a nest egg – to help pay for their education, as a down payment on their first home or to travel the world.
Compared with other investments, permanent life insurance can help you build a nest egg more tax-efficiently. While the cash value is growing inside the policy, you’re not subject to tax on the growth, within prescribed limits. As a result of this tax advantage, more of your savings go towards your child’s future.
When the children turn 18 you can transfer the ownership of the policy to them. They can simply let it grow or, when needed, access its cash value through withdrawals, surrender or borrowing.
Ensures they can get protection as adults
Some life insurance policies offer options to guarantee your child’s future insurability – regardless of disability, illness, occupation, residency or foreign travel.
Without this, children who develop serious health problems may not be able to get the financial protection they need when they grow up. Depending on the career they chose or where their travels take them, they may even be denied coverage. This may make it impossible for them to properly protect themselves and their family.
When you buy insurance with an option guaranteeing your child’s future insurability, you help protect them from these financial risks. If your children eventually have children of their own, you are also helping to protect future generations.
Talk with your financial security advisor
Some people believe life insurance for children is unnecessary. For others, its special benefits (such as tax-advantaged growth and guaranteed insurability option) make it a valuable part of their family’s financial security plan. Talk with your financial security advisor to help decide what’s best for your children.
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